Assignment task: Consider the following as to how each would effect the estate tax return for Allen's estate:
Allen's will also provided that a trust be created and funded with $500,000.
The terms of the trust provided that $30,000 was to be paid annually to his friend Abe Aiello for 15 years. At the end of the 15 years, the remainder was to be paid to the local SPCA, a qualified organization pursuant to IRC § 2055(a). At Allen's death, the local SPCA had closed its operations. The value of Abe's term of years interest is determined to be worth $300,000 and the value of the remainder interest is worth $200,000.
a) What are the consequences to Allen's estate tax return, if any?
b) What would be the consequences to Allen's estate if the trustee of this trust had the ability to invade the principal of the trust during Abe's term of years for the benefit of Abe if he needed it for his health, education, welfare and maintenance?